Dow Closes at Record as Inflation Worry Eases, Bond Yields Fall

Stocks finish mixed, with the Dow at a record, as U.S. consumer prices in February rise less than expected, easing investors' worries about inflation.
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The Dow Jones Industrial Average on Wednesday closed at a record in mixed trading after U.S. consumer prices in February rose less than expected, easing investors' worries about inflation.

Benchmark 10-year Treasury bond yields fell to 1.514% on Wednesday after the core consumer price index rose 0.1% from a month earlier and 1.3% from the prior year, indicating that inflation pressures remain muted. 

In addition, the Treasury sold $38 billion of 10-year notes at a high auction yield of 1.523%, with solid demand for the benchmark paper.

The Dow, which also set an intraday high during Wednesday's session, finished up 464 points, or 1.46%, at 32,297. The S&P 500 rose 0.6%, while the Nasdaq eased 0.04%.

The Nasdaq soared 3.69% on Tuesday for its biggest gain in four months.

Meanwhile, House Democrats passed a $1.9 trillion coronavirus relief bill on Wednesday. President Joe Biden hopes to sign the bill Friday after Congress formally sends it to the White House

Recent fears of higher inflation and an expected increase in borrowing costs have sent bond yields higher and shares of high-flying tech giants lower amid valuation questions.

"While we aren’t seeing much inflation in the consumer price index, as Wednesday’s data showed, we may start to see higher CPI prints by mid-2021, as the economy reopens at a more substantial pace, coupled with a new round of stimulus checks," said Nancy Davis, founder of Quadratic Capital Management and portfolio manager of the Quadratic Interest Rate Volatility and Inflation Hedge ETF  (IVOL) - Get Report.

The market's rotation to value and cyclical stocks and away from expensive growth shares has dinged tech giants over the past week -- apart from Tuesday, when Tesla  (TSLA) - Get Report jumped 20% and Apple  (AAPL) - Get Report rose more than 4%.

That could continue with the House of Representatives passing the $1.9 trillion coronavirus relief bill on Wednesday and sending it to Biden for his signature.

Investors have begun piling into stocks expected to benefit from Biden's stimulus plan and a reopening of the economy as more Americans receive COVID-19 vaccinations.

General Electric  (GE) - Get Report on Wednesday said it reached an agreement to combine its jet-leasing business with Ireland's AerCap  (AER) - Get Report in a deal valued at $30 billion.

The company also repeated that industrial revenue in 2021 will grow "organically in the low-single-digit range" while earnings should come in between 15 cents and 25 cents a share. 

GE also also unveiled plans for a 1-for-8 reverse stock split.

The stock slumped 5.4% to $13.25.